Semiconductor stocks were mostly positive on Wednesday, a day after bears mauled the sector on negative economic news. Broadcom's earnings report late Thursday will be a closely watched sentiment gauge, an analyst said.
On the stock market today, the Philadelphia semiconductor index, known as SOX, advanced 0.3%. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
On Tuesday, the SOX plunged 7.8%, led by declines for AMD, Marvell Technology, Micron Technology, Nvidia and other leaders. The SOX drop was its worst daily slump since March 2020.
Semiconductor stocks and the broader market fell following a weak showing from the Institute for Supply Management's manufacturing index. The index, a key barometer of U.S. factories, was negative for the fifth straight month, MarketWatch reported.
Chip stocks also reacted negatively to a report that showed China's factory activity contracted for a fourth straight month in August.
Also, the Semiconductor Industry Association on Tuesday reported below-seasonal chip sales for the month of July.
Semiconductor Stocks Mostly Up
On Wednesday, some semiconductor stocks continued to fall. Decliners included Arm Holdings, Intel, Nvidia and Power Integrations.
But most semiconductor stocks rebounded. Gainers included AMD, Marvell, MaxLinear and Micron.
Tuesday's sell-off likely was driven by program trading, Mizuho Securities trading-desk analyst Jordan Klein in a note Wednesday.
"Machines do not care about fundamentals in the sector or end markets," Klein said. "There has not been a change in the past three to four days in the growth potential or upside from AI and the broader semi cycle."
Broadcom's earnings report and guidance after the close on Thursday "will matter a lot" for semiconductor stocks and sector sentiment, Klein said.
Broadcom stock rose 0.9% to close at 154.12 on Wednesday.
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